Some Chinese semiconductor stocks could deliver great returns for investors. These companies are deeply entrenched in the semiconductor industry, playing pivotal roles in the design, manufacturing and supply of essential components for a wide array of technological applications.

From consumer electronics to automotive technologies and industrial machinery, the reliance on semiconductor products continues to grow. I also feel that the growth prospects of these companies in China could be higher than those found elsewhere. Mostly that’s due to investors being primarily focused on the U.S. markets and companies in Taiwan.

So here are three Chinese semiconductor stocks for investors to consider this month. There are substantial risks with these companies but for investors with the right risk tolerance, the huge upside potential could outweigh the negatives.

InvestorPlace - Stock Market News, Stock Advice & Trading Tips

Hua Hong Semiconductor (HHUSF)

Hua Hong Semiconductor (OTCMKTS:HHUSF) is one of China’s leading pure-play foundries specializing in semiconductor manufacturing services.

In 2023, the company made significant strides by gaining approval for a $2.6 billion listing on the Shanghai Stock Exchange. This move — marked as China’s biggest listing of the year — is set to position it well in the future, especially with its “8-inch + 12-inch” specialty technologies sector.

In terms of performance and market position, Hua Hong Semiconductor’s strategy to leverage its $2.6 billion listing for expansion and its focus on specialized semiconductor technologies suggest a long-term growth trajectory.

Hua Hong is a crucial foundry in China. As the country pivots to producing semiconductors internally and pulling away from its reliance on Taiwan and other countries, I expect that HHUSF stock will only appreciate in value.

Intchains Group (ICG)

Intchains Group (NASDAQ:ICG) is a provider of high-performance computing ASIC chips and software for blockchain applications.

ICG is another one of those Chinese semiconductor stocks that is worth considering. It is, however, a contrarian pick, as the company’s stock price has fallen 24.6% year to date. Part of this drop includes a decline in ICG’s top line. In 2022, ICG’s revenue saw a significant decrease of 25% compared to the previous year. Sales dropped from 631.8 million renminbi (or $68.7 million) to RMB 473.7 million. Earnings also decreased by 21.1% to RMB 355.2 million.

However, there are a few things that I feel make the company an attractive pick. For one, the company announced the acquisition of assets related to the Goldshell brand from a Singapore-based company. This acquisition, valued at $550,000, includes intellectual property focusing on Web3 infrastructure, which synergizes with ICG’s existing operations.